Azerbaijan’s currency reserves have been dramatically declined in the last couple of months

The Central Bank of Azerbaijan’s (CBA) intervention cost was $ 1,073 billion US in April 2015. Bank’s total currency reserves declined to $ 8,397 billion US in April 2015 since it was $ 9.47 billion US previous month. Reminded here that CBA’s currency reserves were $11.004 billion US by 1 March, $12.68 billion US by 1 February $13.758 billion US by 1 January 2015. Currency reserves have been declined from $ 15,193 billion US in August 2014 to $ 8,397 billion US in April 2015.

CBA’s currency reserves have been declined by $ 6,796 billion US in last 8 months. Decrease of CBA currency reserves in April 2015 totaled $1.08 billion US (-11.4%). In 2015 their decrease totals already $5.37 billion Us (-39%). In accordance with CBA forecast, by the end of 2014 currency reserves should have reached $16 bn, but the forecast was made before the fall in world oil prices.

CESD experts have mentioned that the main reason of extraordinary declining of currency reserves in April 2015 was related to high demand for foreign currency in the first 10 days of April: “Without any justification, CBA depreciated the manat’s rate against the US dollar in the first 10 days of previous month. The manat started appreciating only in the after the 1/3 of the month. CBA uses not more psychological methods to decrease demand for foreign currencies”.
Meanwhile, CBA administratively decreases volume of national currency in the currency market. CESD’s monitoring show that many currency exchange offices faces lack of the manat volume in last couple weeks. Although demand for the national currency is not increased, but volume of the manat is administratively controlled by CBA. Central Bank targets using such administrative methods to decrease a demand for foreign currencies.

CBA has reported that Azerbaijan’s monetary base continues to demonstrate phenomenal decline by falling to the level of 1 December 2011. According to the official reports the monetary base amounted to 7.418 billion manat 1 May 2015 versus 8.339 billion manat by 1 April, 9.109 billion manat by 1 March, 10.55 billion manat by 1 February and 11.541 billion manat by 1 January. As a result, in April its decline made up 920.8 million manat (-11% from March) against 770.5 million manat in March (-8.5% from February), 1.441 billion manat (-13.7%) in February. In 2015 the monetary base has already reduced by 4.123 billion manat (-35.7%) and it conforms to the level of 1 December 2011 as 7.417 billion manat. The monetary base reached 11.743 billion manat (absolute record) by 1 September and 11.64 billion manat by 1 January 2014.

CESD forecasts that demand for foreign currency will be declined in May 2015 due to gradual appreciation of the manat.